Korea’s Policy for Enhancing FTA Utilization and Policy Implications
Inkyo Cheong Economics, Inha University Contact: [email protected]
www.FTAinfo.net/eng
Prepared for 2014 ARTNet (Bangkok, Sep. 22-23, 2014)
An early version of this paper was published as an ERIA Discussion Paper on the title of “Korea’s Policy Package for Enhancing its FTA Utilization and Implications for Korea’s Policy” in April 2014.
1. Background : Korea’s FTA Network
Korea’s Policy Package for Enhancing its FTA Utilization
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ASEAN
MERCOSUR
GCC
EFTA
EU
Singapore
Canada
USA
Russia
India
Japan
Colombia
NZ Aus.
Peru
In force or concluded Negotiations Pre-negotiations
China
Korea
Chile
Turkey Mexico
1. Background : Korea’s FTA Network
Korea’s Policy Package for Enhancing its FTA Utilization
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EU USA
Colombia
Peru
Korea Turkey
2008 was a critical year for Korea’s FTA policy
1. Background : Korea’s FTA Utilization
FTA Utilization Preferences as of 2008 (percent of respondents by country)
Source: Kawai and Wignaraja (2011)
Korea’s Policy Package for Enhancing its FTA Utilization
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2. Survey : Recognition of FTAs
Perception of Implemented FTAs (percent of respondents by country)
12.5
38.3
62.5
88
62
38
0.0
20.0
40.0
60.0
80.0
100.0
Chile ASEAN EFTA
Know Don't Know
Note: Survey based on 221 firm samples. Source: Cheong and Cho (2010)
Korea’s Policy Package for Enhancing its FTA Utilization
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2. Survey : Impediments to FTA Use
Impediments to FTA Use (percent of respondents by country)
Note: Survey based on 221 firm samples. Source: Cheong and Cho (2010)
35.83
4.17
34.17
10.8315.00
0
10
20
30
40
Low tariffpreference
Lack ofinformation
ROO-relatedcosts
Otheradministrative
costs
RemainingNTBs
Korea’s Policy Package for Enhancing its FTA Utilization
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2. Survey : Awareness of ROOs
Awareness of ROOs (percent of respondents by country)’
Note: Survey based on 221 firm samples. Source: Cheong and Cho (2010)
19.5
32.1
48.4
0
10
20
30
40
50
60
In details General issues No idea
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Korea’s Policy Package for Enhancing its FTA Utilization
Policy maker and national coordinator
FTA Promotion and Policy Adjustment Authority (FTAPPAA)
3. Organization for the Promotion of FTA UItilization 3.1. A Control Tower
FTAPPAA
• FTAUC
• Assistance Centers
Implementation agency The National FTA Utilization Center (FTAUC) Regional (local) FTA Assistance Centers.
FTAPPAA
National FTA Utilization Center (FTAUC)
Regional (local) FTA Assistance Centers (13)
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Korea’s Policy Package for Enhancing its FTA Utilization
3. Organizations for the Promotion of FTA Utilization (2010) 3.2. Major Components of Korea’s FTA Support
Business demand survey
FTA business information
FTA expert, consulting
Direct assistance for business
FTA system maintenance
Major contents
Regular and special meeting and surveys for industrial agencies, representative companies
- FTA homepages for tariffs, rules of origin
- Seminars, workshops
- Guide books, pocket books, brochures
- Cyber-learning system on FTAs
- FTA class in universities and graduate schools
- Courses for FTA consultants and experts
- FTA business consulting
- FTA call center - Local FTA Assistance Centers
- Integrated Business ROO center
- Integrated FTA Info Center
Governent agency
- FTAPPAA and national related agencies
- National FTA Utilization Center (New)
FTAPPAA and related agencies
FTAPPAA and related agencies, universities, business forum, academic associations
Related national agencies, customs brokers, FTAPPAA
Korea Customs Services, Center for ROO, Chamber of Commerce, KITA, etc.
Korea’s Policy Package for Enhancing its FTA Utilization
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Utilization Ratio
Utilization target ratio of 60%
• 40% by 2012
• 60% by 2013
Consulting
4. FTA Utilization Targets 4.1 Utilization Ratio
‘10 ‘11 ‘12 ‘13 Total
Number of
Companies 600 2,000 3,000 5,000 10,600
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Korea’s Policy Package for Enhancing its FTA Utilization
Utilization Ratio Higher than 60% utilization ratio for most FTAs under implementation
• 69% for the Korea-US FTA
• 78% for the EU-Korea FTA
4. FTA Utilization Targets 4.2 Recent Performance
Export Import
2011 2012 March 2013 2011 2012 March 2013
Chile(‘04) - 75.2 78.4 95.8 97.9 99.1
EFTA(‘06.9) - 79.8 79.9 55.7 61.9 45.7
ASEAN(‘07) 33.1 37.7 41.5 73.8 73.8 55.1
India(‘10.1) 35.8 36.2 45.2 53.6 52.7 59.3
EU(‘11.7) 65.7 81.4 83.6 47.1 66.8 67.9
Peru(‘11.8) 61.3 78.0 90.4 52.6 92.0 67.7
USA(‘12.3) - 68.9 73.8 - 61.0 63.7
Source: Committee on Domestic FTA Promotion (2013. 9)
FTA Utilization Ratio by FTA and Export-Imports
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Korea’s Policy Package for Enhancing its FTA Utilization
5. Policy Package for FTA Utilization 5.1 New Package (2013)
Procedural improvement
FTA business information
Business capacity building
External affairs
Domestic FTA support
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Korea’s Policy Package for Enhancing its FTA Utilization
Procedural Improvement
Simplification of the certificate of origin (CO)
Support for obtaining the Authorized Economic Operator (AEO)
5. Policy Package for FTA Utilization 5.2 Details of Supporting Measures
FTA Business Information
Integrated FTA Business Portal
Integrated trade information system for FTA partners
Integrated portal for preferential tariff rates under Korean FTAs
Integrated portal for FTA rules of origin (ROO)
Business oriented domestic workshop for businessmen
Domestic FTA Support
Improve coordination for FTA business supports by various agencies
Install the regional FTA centers in major cities/localities/industrial hubs
Organize FTA Expos, FTA workshops in FTA partner countries
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Korea’s Policy Package for Enhancing its FTA Utilization
External affairs FTA implementation in FTA partner countries
Cooperation between customs authorities of FTA partners
Improve and update existing FTAs (especially tariff liberalization)
Outreach for FTA utilization by companies of FTA partners
5. Policy Package for FTA Utilization 5.2 Details of Supporting Measures
Business Capacity Building
National consulting system for companies
Education for FTA business professionals • FTA classes in undergraduate universities
• Graduate FTA courses/departments
System for the management of the rules of origin (ROO)
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Korea’s Policy Package for Enhancing its FTA Utilization
5. Policy Package for FTA Utilization 5.3 Examples of FTA Supporting Measures
Integrated portal for preferential tariff rates under Korean FTAs
16
Korea’s Policy Package for Enhancing its FTA Utilization
5. Policy Package for FTA Utilization 5.3 Examples of FTA Supporting Measures
Integrated portal for FTA rules of origin (ROO)
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Korea’s Policy Package for Enhancing its FTA Utilization
5. Policy Package for FTA Utilization 5.3 Examples of FTA Supporting Measures
FTA call center
Ask whatever on FTA utilization FTA call center Number 1380 anywhere in Korea
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5. Korea’s Policy Package for Enhancing its FTA Utilization
Business Mind for FTA Utilization
Common interests for exporters and importers
CEOs’ recognition on FTA businesses
Easy materials for CEOs
FTA business models
6. Policy Implications for developing countries
Implications Based on Korea’s Experience
Identify the barriers which prevent businesses to utilize FTAs
Coordination among national agencies
FTAs with large economies
Quality of FTAs
Cooperation between FTA partners
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5. Korea’s Policy Package for Enhancing its FTA Utilization
6. Policy Implications for developing countries
Tariff elimination ratios in Korea’s major FTAs
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Korea’s Policy Package for Enhancing its FTA Utilization
Political economy of active trade policy
National consensus for developing economy
Political leaders’ commitment for trade policy
Building human capacity for trade
Korea’s Policy Package for Enhancing its FTA Utilization
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6. Policy Implications for developing countries